When you invest in a property and get money as rent, it constitutes the net profit that you get from the property. This is not the same as profit.

Real estate investing is a serious endeavor. In a market climate that favors buyers, it’s tempting to jump in the wagon of real estate investors and join in the hunt for the best property. Potential investors must realize that the search will probably be long and hard to acquire the property most suited to their investment needs. To generate positive ROI, numerous offers will be made to sellers with most being objected, but the goal is to buy the Las Vegas investment property at a wholesale price, not asking.

Real estate markets around the world are experiencing challenges related to a property cycle slump. But with these challenges come the opportunities of a lifetime for investors who have clear understanding of finding the proverbial “diamonds in the rough”.

Selling a property will likely be a taxable event, so it’s important to be prepared with a strategy for this. Do you have an accountant, financial planner, and/or lawyer in place? Sellers expect to be negotiated down a little and they add that to the asking price in most cases, so smart investors should know to set their first offer BELOW what they are hoping to pay.

Investment in property generally requires investment of a largish quantum of money, which calls for caution and circumspection on the part of the investment. ROI can be calculated, but you have to look at the investment down to the smallest cost while keeping the overall picture in mind too. Just to illustrate, if you invested $100 on a property and made $15 on it, your ROI would be 15%.

If you want to calculate the ROI do have a look at the ROI percentage, the cost benefit ratio and the time period in which the investment would pay you back for itself and also give a return over and above the initial money invested. If you divide the costs incurred by the benefits that accrue on a monthly basis, you are able to calculate the payback period.

Now look at the tax aspect of Las Vegas property investment. If you hold the property for more than one year, the capital gains rate is just 15%. However, if you hold the investment for less than a year and you are in the 35% tax bracket, your capital gains tax rate would also be 35%. Do look at the capital recovery time period too, as this is the time which you would have to wait out to get enough benefits to get back the investment principal amount. These are some of the important aspects that you should not forget while considering investment in property.

One of the aspects of REO properties is that there is no equity, which means that it cannot be auctioned off. Certain risks are associated with REO properties especially if they are taken in an ‘as-is’ condition. This type of Las Vegas investment property has generally been taken up as repossessions by lenders when borrowers default on their mortgage payments. Lenders are generally not interested in bearing management costs and holding costs on such property. They just wish to recover as much of the money they have lost on a failed loan as they can. Which is why they are willing to sell off the re-possessed property at rates that are below what the market wants for the property.

REO properties are also foreclosed properties, but the different part about them is that they could not be sold at an auction. These properties were sent to the bank and they are not carrying a mortgage anymore. REO properties are sticky for lack of disclosure purposes and liability releases more than anything else. You will be informed that the lender is basically released from all liability because they have no clue about the home. REO properties are usually listed for sale with local real estate agents. Given the current state of the economy, lenders are selling their REO properties for a greatly reduced price.

REO properties are a financial burden to banks. All of the upkeep is their responsibility. They are usually sold as is, so a thorough inspection is necessary to estimate the rehabilitation costs. Software programs exist that allow you to print inspection forms and work from a set of standard rehab specifications to help you accurately estimate rehab costs. REO properties are a drain. Each day that a property is vacant, it costs money to maintain.

Lenders that have an REO property would like to sell it off as soon as they can. It is true that they would not like to hold on to it for long which is why they enlist the services of local estate agents to sell it off. They are also quite willing to hammer out some structured deals for those buyers who want to buy such properties in bulk.

Buying an REO property is not a walk in the park as a cheap Las Vegas investment property could very well attract a lot of competition and interest from other investors. There will be quite a few bids and one could also have participation of institutional investors. REO is better than auctions per se, because of the fact that in auctions you have to pay up front in cash and do not get the chance to inspect the property before buying it. In some cases, people can take up loans under the rural housing plan towards these types of properties. In auctions, however, you will be able to ensure that you do not have to deal with the lender, but buy the property directly.

There is no rule or restriction that owner financing be limited only to traditional residential Las Vegas investment property. Indeed, a vast host of property types including land and real estate, commercial property and what have you. Some of the conditions under which owner financing may be concerned include situations when the property is not moving fast in the market or if it is in a rather dilapidated condition. Owner financing is the process where the owner extends credit to the buyer without the intervention or involvement of banks or financial institutions. It has been observed empirically that owner financing is more common among investors as compared to homeowners.

Owner financing means structured deals that are beneficial to both the seller as well as the buyer. It also helps in generating steady cash flow for the seller. The seller acts as the bank or the financing authority with the buyer paying the amount owed over a period of time and in installments as specified in the terms of the agreement signed by the seller and the buyer purchasing the Las Vegas investment property. The option to take big or small down payments is vested with the seller, which the buyer needs to comply with.

When it comes to owner financing, the seller generally asks for a higher down payment than mortgage lenders. However, the interest rate would be lower than what a traditional lender would charge on typical Las Vegas investment property, where owner financing would come from an entrepreneur’s savings.

Interest rates have spreads that are determined by financial institutions. Generally 1.50% to 2.50% over prime is the general interest rate with those who want lower rates being required to do a lot of research. This is not required in the case of owner financing. In a few rare cases, the owner financing may be even at 0% interest, especially in cases when the seller is very keen on selling the Las Vegas investment property urgently.

Seller financing helps to sell Las Vegas investment properties much faster as it becomes extremely attractive to buyers. This helps in not only ensuring great buyer interest, but also the ability to generate higher price for the property being sold.

The Companies Act is the act under which property management companies are incorporated and this means they have to be compliant with company law provisions. These companies are capable of handling legal and other property issues as they are comprised of professional managers. The company is vested with the responsibility of dealing with a myriad of property related problems. Many of these are small businesses and may not even be equipped with simple e-mail technology.

There are many property marketing related services that property managers offer. They attempt to find a qualified resident and also render services by evaluating residents, getting leases signed and also renewing the same. Other services are upkeep of the property and lease negotiations and renewals. The company also provides support to the managers and has in-house staff to lead to a collaborative effort. The main objective is to make the project commercially viable and enhance the value of the project at the same time. But to do this, laws relating to building codes, affirmative action rules and commercial business practices need to be adhered to.

When it comes to the area of evicting recalcitrant and problematic residents, these residential property managers are able to save costs substantially. Also, when it comes to getting information about the property, residents want to know more than just unintelligible abbreviations like w/d, hw fl, d/w, a/c. Those who want to move into the building would like to see floor plans, know details of the building and also information dealing with its location.

If property managers are paid to let a property from a landlord’s side, they have to be associated with a licensed Real Estate Agent. Regulation also states that if they don’t take a brokerage or letting fee, but take a part of the rental income, they would be outside the purview of regulation. These managers also have in-depth knowledge of interior and exterior work, plumbing, electrical and other systems that are material for a building. There are annual maintenance contracts that are valid too and these managers look at various residential, commercial farms and ranch properties.

In addition to all these services, it is possible to get some accounting services from property management companies. This includes providing a monthly statement that documents various monthly income and expense items relating to the management company on your property.

Best Realty Finder

Passive income is the path to becoming wealthy.  Part of enjoying that wealth means minimal stress or worries.  One of the benefits of hiring a management company for your Las Vegas investment property, is that they take care of any problems that arise with your unit, but it’ll cost you.  At the starting gate, a $265 registration fee is required to cover administrative expenses.  The monthly management fee is equal to 10% of the monthly rent, or a minimum of $100.  Should multiple properties be managed, that rate can be negotiated to 8% or 9% depending.  Security deposit is equal to one month’s rent, but Best Realty Finder also requires the tenant pay a cleaning deposit, and if the investment owner agrees to a pet, the tenant must pay a pet deposit.  To cover any emergencies or repairs (keeping your Las Vegas investment property in good condition) a reserve of $300 on a property if there is a home warranty is required, or $500 with no home warranty (i.e. older properties).  Accounting and direct deposit is also included in their services.

To cover the mortgage each month, pay the management company, and make a small amount of passive income, renting out your Las Vegas investment property is a must.  Best Realty Finder can find a tenant for you at the cost of 75% of one month’s rent, and a co-op fee of $300 (which covers the fee paid to a realtor who brings in the new tenant).  Background checks are also performed on each tenant including credit checks and required references, all of which are checked thoroughly.

In the event of emergencies there is a 24 hour service, and a list is given of numbers to call to reach certain employees in the event of a dire emergency.  (This is important to both establishing trust with your tenant, as well as the investor being able to contact the company in case of an emergency.)

Best Realty Finder provides service for both residential and commercial Las Vegas investment property.  One interesting thing about this companyis that although most can help you find and purchase an investment property, they also provide accommodations.  Should you find and purchase a rental property through them during your stay, Best Realty Finder would reimburse part of your lodging, and if the stay is only a day or two to find and purchase a Las Vegas investment property, the fee is waived entirely.

For more information or to schedule an appointment, please contact:

Maria Schlager, Realtor®

Property Manager

BEST REALTY FINDER

5540 S. Ft. Apache Road, Suite 100

Las Vegas, NV  89148

(702) 769-5077 – cell

(702) 222-2288 – office

(702) 222-3947 – fax

Maria@bestrealtyfinder.com

Terra West Property Management

Hiring a property management company saves an investor time and frustration.  The trade-off is it also costs the investor.  Terra West has an initial start-up fee of $300 right out the door.  Once they’re managing a property for you, the cost is 10% of the monthly rent on that unit.  (Discounted to 8% is five or more units are managed.)  To maintain the repairs on your Las Vegas investment property, a reserve of $250 is required.  Should your tenant decide to renew, a $150 lease renewal fee is required at the beginning of the next year’s lease.  Terra West’s management also includes services like accounting, direct deposit of rent into the investor’s account, periodic inspections of properties, etc.

Occupation of your Las Vegas investment property is a must, to keep passive income flowing.  Should you decide to outsource finding a tenant, Terra West has two leasing programs, a premium residential and a basic option.  Both are mostly the same, acquiring photos of the property, having an inhouse agent find a rentor for it, post ads on local websites, and sign all the papers.  The two additional factors with the premium plan is that you have an ad placed on a local homes for rent website and receive email updates on how the process is going.  The premium plan has a fee equal to the first month’s rent, while the basic has a $20 per month ad fee, and a $350 fee once a tenant is found.  Although the basic seems cheaper, the market in Las Vegas is currently flooded with rentals, so be sure to weigh out the options of the premium vs. the basic (remembering the more your Las Vegas investment property sits vacant, the less money you’re making).

No information is listed on the website for emergencies, but as this company has several offices around Las Vegas, I imagine at the least a 24 hour messaging service is set up for electrical or water emergencies.  Should you require further information about Terra West, please contact:

Mario Malatesta Jr. ARM®, PMP, CAM
Director of Residential Property Management
Broker Salesperson, REALTOR®
Terra West Property Management
2655 South Rainbow Blvd, Ste 200
Las Vegas, Nevada 89146
702.251.4563 office
702.251.4594 fax